(Reuters) - Federal prosecutors on Monday announced insider trading charges against a former Yahoo employee and a fund manager for illegally sharing and trading on secret company information.

The pair pleaded guilty in Manhattan federal court on Monday, the Manhattan U.S. Attorney's office said in a press release.

They were also charged by U.S. securities regulators in a parallel civil proceeding. The SEC said it is pursuing a civil settlement with the two.

Prosecutors said Robert Kwok, 36, a former senior director of business management at Yahoo, had illegally tipped Reema Shah, 40, about an impending July 2009 partnership between Yahoo and Microsoft.

Based on the tip, Shah, who worked at a subsidiary of Ameriprise Financial Inc, bought 700,000 Yahoo shares and cleared $389,000 in illegal profits, prosecutors and the U.S. Securities and Exchange Commission said.

Laura Grossfield Birger and Ted Cassman, lawyers for Kwok and Shah, did not immediately respond to calls seeking comment.

A spokeswoman for Yahoo, Dana Lengkeek, said Kwok left the company in February 2010, but declined comment on the case.

Kwok and Shah both pleaded guilty on Monday to one count each of conspiracy to commit securities fraud, which carries a maximum five year prison term, prosecutors said. Shah pleaded guilty to an additional securities fraud charge, which carries up to 20 years in prison.

Kwok and Shah, who both live in California, first met in January 2008, authorities said. In exchange for inside information on Yahoo, Shah told Kwok about the May, 2008 acquisition of Moldflow by design company Autodesk. Kwok made $4,754 in illegal profits trading on the information, the authorities charged.

The cases are U.S. v. Robert Kwok and U.S. v. Reema Shah, U.S. District Court for the Southern District of New York. Case numbers not yet assigned.